Product Portfolio Strategy for Internet Marketing
Here are two concepts: product line and product portfolio. Product line refers to a group of products that are closely related in technology and structure, have the same use function, and have different specifications to meet similar needs. Product portfolio refers to the combination of all product lines operated by an enterprise. It includes three factors: the breadth, depth and relevance of the product portfolio. The differences of these three factors constitute different product portfolios. Product portfolio strategy refers to the combination of the breadth, depth and relevance of the product portfolio based on its business objectives, its own strength, market conditions and competitive situation. Since the breadth, depth, and density of the product portfolio are closely related to sales performance, in network marketing, determining which products or services to operate and clarifying the relationship between products are the main content of a company’s product portfolio strategy.
Expand product portfolio strategy
Also known as a full-line comprehensive strategy, that is, to expand the breadth and depth of the product portfolio, increase product series or projects, and expand the scope of business to meet market needs. This will be conducive to the comprehensive utilization of corporate resources, expand the scale of operations, reduce operating costs, and improve corporate competitiveness; it will also help meet the diverse needs of customers and enter and occupy multiple market segments.
However, the strategy of expanding the product portfolio requires companies to have multiple distribution channels and adopt a variety of promotional methods, which requires higher resource conditions for the company.
For example, after Amazon steadily occupied the main product market of books, Amazon began to add new business varieties, and its business scope has successfully expanded from books and audiovisual products to other lucrative products. In November 1998, Amazon opened an audio-visual and gift store. The merchandise is omnipresent from game discs, Sony portable watches and Barbie dolls. At the end of 1998, Amazon purchased two companies in California and Boston with new Internet technology for $280 million to help expand its online marketing business.
Reduce product portfolio strategy
The product portfolio reduction strategy refers to reducing the breadth and depth of the product portfolio, reducing some product series or projects, concentrating on operating a series of products or a few product projects and increasing the level of specialization in order to obtain more from less-operated products profit, so it is also called market professional strategy. This strategy is conducive to enterprises to reduce capital occupation and accelerate capital turnover; it is conducive to the concentration of advertising and promotion, distribution channels, etc., and improves marketing efficiency.
Product extension strategy
Every product operated by an enterprise has its specific market positioning. Product extension strategy refers to completely or partially changing the market positioning of the company’s original products. The specific methods include upward extension (from the original low-end products to increasing the high-end products) and downward extension (from the original high-end products to increasing Operating low-end products) and two-way extension (from the original operation of mid-range products, to increase the operation of high-end and low-end products).
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From the perspective of future development trends, products suitable for online marketing are not based on their form, price or delivery method, but mainly based on two aspects i.e. the difficulty of online transactions and the added value of online marketing to the product. Certain goods or services, due to their own characteristics, use traditional business methods, the transaction process is complicated, the cost is high, it is difficult for consumers to obtain comprehensive information, or the problem of product information asymmetry is more prominent.
For example, buying a house, buying a car, inquiring about financial information, etc., these kinds of goods or services are more suitable for online marketing; and for some goods and services, it is inherently simple to use traditional marketing methods, such as books, computer software, audio-visual products, ticketing services, etc. If these products and services are moved online, we must try to increase the added value of these products, such as providing more choices, lower prices, reliable quality and good reputation, so as to attract consumers.